insurance to employees

This query is : Resolved

manoj (Querist)
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25 March 2009 Without any statutory obligation company pays insurance premium on some employee just to retain them that after completion of 10 years of service in company they would liable to get the matured amount.At the same time employees assigned this in the company name.
My question is ,
1.Is this insurance expenses allowable for company?
2.What is the treatment for employees?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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25 March 2009 At the time of payment of preium it shall be treated as expenditure in the books of the company.

Since the policy has been assigned to company, the employee is not certain of his getting the same.

If on maturity or on retirement if company takes back the money for any reason it will be shown as income in the books of the company.

If the employee receives the money on maturity at the time of employement it will treated as part of salry.

If the empllyee receives the money at the time of retirement or resigning it forms part of retirement benefits and taxed accordingly.